Net Neutrality is More than Meets the Eye

What's bewildering in the net neutrality debate is that both sides say they have the same goals - they want the Internet to maintain its usefulness, to keep maturing, and to continue to get better. At first glance, it would be easy to think that one side wants that done via government regulation and the other through the free market. But that's really not the case. Network neutrality is a much more complex issue than "Big Business vs. Consumer Rights" or "Big Government vs. Free-market Competition".

The term 'network neutrality' relates to the regulation of the Internet or more specifically, to the underlying networks that make the Internet possible. Described by one of its more popular supporters David Isenberg, a former AT&T executive, network neutrality "means that the network does not discriminate among different types of traffic based on the traffic's source, destination or content."

In consideration of this definition, to this point network neutrality has essentially been a guiding principle of the Internet. Network providers like Verizon or Qwest have not "discriminated" against different types of network traffic - they have not prioritized content of one site or one content provider over another. Internet users can access websites and content from Google and Yahoo! on equal terms. But without the principle of network neutrality in place, how that content gets served might vary based on how much these and other companies were willing to pay.

Telcos like Verizon argue that they should be able to control how their networks operate. They are the ones investing billions of dollars into network infrastructure. When Yahoo! offers users streaming video that is bandwidth intensive, Verizon sees higher traffic and network use but not necessarily higher profits. They want to change that and pricing their service at different levels - 'discriminating' network traffic - is their answer.

Both sides are hitting the streets hard with their message. And both are equally guilty of playing upon the public's fears and emotions. Network neutrality advocates continually harp on the potential violations of freedom of speech that could occur in a non-network neutral environment. They believe that without legislated network neutrality, telcos could filter or give preferential treatment to certain content through pricing options. That might include only allowing access to the political or religious content of the highest bidder. But considering how closely the FEC examined free speech and the use of blogs and the Internet in the electoral process, for example, it's probable that such concerns are unwarranted.

Equally doubtful is that legislated network neutrality would somehow "deprive parents of new technologies they may use to protect their families from online harm." That quote comes from a letter sent by Senators Sam Brownback and Jim DeMint to their colleagues. The premise of this argument and others like it is that network neutrality legislation (i.e., government regulation) would stifle innovation.

In the case of the Senators' letter, besides that quote being somewhat of a scare tactic, their particular assumptions are not correct. The applications and technologies that protect families online sit on top of network pipes. Net neutrality proponents focus on the network not the applications. Parents can rest assured that legislated network neutrality would not somehow make the net any more unsafe than it already is.

In general, the principle of network neutrality is what has allowed the Internet to be as innovative as it has been. But to reiterate, network neutrality has been a guiding principle of the Internet to this point in its history. It hasn't been called 'network neutrality' until recently. Christopher Yoo, a Vanderbilt University law professor often referenced by opponents of network neutrality legislation, writes that there is a crucial difference between the end-to-end argument (his preference over the term 'network neutrality') being a design principle versus a regulatory mandate - "circumstances do exist in which mandating network neutrality would actually harm competition."

The current policy statement that the FCC adopted on August 5, 2005 confirms four net neutral type principles to "preserve and promote the open and interconnected nature of the public Internet." They've shown that they are willing to back them up too. Thus, in order for a non-network neutral Internet to actually exist, either a huge policy shift would need to occur or it would have to be legislated, just as network neutrality as a regulatory mandate would have to be.

History would prove that the government does not do a good job regulating telecom issues. Just look at what happened on January 1, 1984 and then just over 21-years later on January 31, 2005. The first date represents when AT&T was broken up into seven Regional Bell Operating Companies, due to its monopoly over the local and long distance telephone market. The second date is when SBC bought out AT&T and in essence restored it as a local and long distance provider (SBC subsequently assumed the name 'AT&T').

Congress has net neutrality in its scope though and seems somewhat determined to act on this issue. There are several proposed bills in the work. The Internet is not broken, however, and it doesn't need anyone to try to fix it. That does not mean that the net neutrality camp is completely wrong and their opponents right. A defeat of the net neutrality bills would only be considered a temporary win for the telcos, if it is a win at all. The status quo is network neutrality as a design principle and there would be nothing that indicated otherwise. Of course, the telcos might try to push their issue by pointing to the defeated net neutrality legislation. In all probability though, they would need some sort of new legal precedence set or legislation of their own in order to really get what they wanted.

If things heat up and Congress is pressured to legislate on this issue with what is on the table, then Senator Ted Stevens' "Communications, Consumer's Choice, and Broadband Deployment Act of 2006" is presently the best choice. It does not impose mandated network neutrality. Instead, it calls for a 5-year annual reporting period by the FCC regarding the "development in Internet traffic" and how those developments "impact the free flow of information over the public Internet." If necessary, recommendations could be made based on those findings.

In the end, the optimal situation is that everything is left as is, without any new legislation being adopted or any new policy towards net neutrality as a design principle. The government should not mandate net neutrality nor should it empower the telcos to exercise oligopoly like gate keeping powers over Internet traffic. Network neutrality as a design principle has worked quite well thus far. At the very least, Senator Stevens' bill as it currently stands adheres to that idea and so if push comes to shove, get behind it.

They believe that without legislated network neutrality, telcos could filter or give preferential treatment to certain content through pricing options. That might include only allowing access to the political or religious content of the highest bidder. But considering how closely the FEC examined free speech and the use of blogs and the Internet in the electoral process, for example, it's probable that such concerns are unwarranted.

First of all, it's already happened in a very limited way, such as when AOL recently blocked www.dearaol.com because it's criticial of AOL policies. Second, what does the FEC's examination of political speech on the Internet have to do with net neutrality?? What a ridiculous implication. The FEC hardly examined political speech in order to guarantee free speech, or anything of the sort, but rather in order to determine whether to regulate political speech. Third, and closely related, the ISPs are private corporations, so they are hardly bound by the First Amendment...

Umm.. The break up of AT&T is precisely what sparked the telecommunications revolution in the first place, or at least it was a huge factor. AT&T had petrified so much that innovation was virtually nil. As for its merger with SBC, the world has changed, and telcom has moved far beyond just local/long distance; and moreover, AT&T is still not even remotely the monopoly it once was.

I believe the telcos are thoroughly right and Google, Yahoo and Microsoft are thoroughly wrong.

I think "the little guy" is taking the side of Google and Yahoo, as if we need to be together against the telcos. We don't. They are both commercial operations, have commercial instincts and in both cases we are their users and consumers, not producers, not their partners and not their competitors.

I think the industrial analogy is the transportation industry. Think of the Internet as a virtual transportation industry. Think of its products - the products of Yahoo and Google and MSN, etc. - as being shipped on the virtual transportation network in virtual trucks (packets).

In the real, bricks and mortar transportation industry the commodity producers buy their trucks and loading docks, load up the trucks and ship out their product. Ah, but their shipping expense does not end there. Those trucks need fuel and because they are using "the highway" that someone else builds and maintains, we collect taxes whenever they buy more fuel, to pay for the highway maintenance. If they want a faster less congested route, it is often a toll road. Or, if they need tons of bulk, they may even pay to move the containers off the trucks and onto rails.

But, in the virtual transportation world of transporting content on the Internet, Google and Yahoo have become multi-billion dollar companies paying only for the cost of getting their product in and out of their own docking ports; that it is the only place at which they pay for "greater bandwidth". In spite of the volume their "packets" consume (vast, vast amounts of volume), in their very commercially productive enterprise, they pay nothing additional for the virtual network that keeps pushing their product along.

Our use of their product, as consumers does not, as individuals, add so much to the overall traffic, on an individual basis, the way the traffic of a Google or a Yahoo does. In any active segment of the Internet, how much is related to Joe Jones (not very measurable) and how much is related to Google - definately measurable.

If we, the little people, cannot understand the distinction between ourselves and these huge commercial enterprises, we will let their sloganeering drag us into supporting them in what is really nothing more and nothing less than a commercial disagreement between a commercial provider of services (telcos) and a commercial user of those services, Google. If that prodivder (the telcos) thinks that the volume of shipments of a commercial user is so vast that they ought to pay something besides their own docking costs on that network, then I'm all for it.

Google and Yahoo are not defending us or anything intrinsic about the Internet. They are defending their profits.

In truth though, they would not lose anything, even on their current business model. They would just charge the advertisers more.

Don't get suckered into supporting Google and Microsoft and Yahoo on this, they don't deserve it, and they are wrong.

Don't get suckered into supporting Google and Microsoft and Yahoo on this, they don't deserve it, and they are wrong.

Make no mistake, this is not just aimed at the big internet advertisers. Giving telcos non-Net neutrality will allow them to shape YOUR traffic as well. SIP/VOIP calls? You can bet those will get dropped to the bottom of the Quality of Service classes they create for network traffic.

Got anything that can compete with their telco businesses like video conferencing ? That will get dropped to the bottom of the heap as well.

Got material critical of the telco's ? Wonder why that doesn't load quickly?

If the telco companies want to regulate google, yahoo etc ... let them charge more for advertisers high bandwidth links.

It's their communications backbone - they build it and they pay for it. Government attempts to "fix prices" by regulation instead of the market only leads to market dislocations which show up in reduced services and/or higher costs in other areas.

I already have to pay more for DSL service as opposed to modem service, as well I should, it's faster.

If Google and Yahoo want to make $billions dumping huge quantities of their product on the backbone, with pricing making no distinction between their volume and mine, we will all suffer in the long run with a telecom capital investment cycle that will run out of steam.

As the "net nuetrality" price fixing schemes proliferate, the profit margins of telecoms will continue to diminish. At some point they might be in such disrepair that the Google's will buy one of them. Then who do you think is going to charge you more for faster downloads, as the "market" means to re-build the capital for an ever improving backbone? Google.

Congress should stay 100% away from this and force the telecoms and the Google/Yahoo/Microsoft to come to their own market terms, not politically mandated terms. We will all be better off for it. If the telecoms create financial problems for Google and Yahho, then like I said, Google and Yahoo will just charge their advertizers more.

Google, Yahoo and Microsoft are just blowing scare tactics at us to protect their own financial empires.

I have never heard such nonsense.

The telecoms do not get 100% of the cost of the telecommunications backbone from me, another 100% of that cost from Google et al, another 100% from the separate ISPs (my ISP is a telecom - why go to a middleman), and a final 100% in tax subsidies.

Yes, they have the fixed land line business, and that is government regulated, but one cannot say that that is such a great boon at this time, because Wireless, Cable and VOIP service competition with land-line services have cut the prices, and profits in those land line services; and yet it is those land line services that are subsidizing the cost of maintaining the telecom-Internet backbone.

http://www.networkworld.com/columnists/2005/100305johnson.html?vo&code=nlvoice8016

At present one would not call the telecoms extremely profitable, with the top four (2005) getting average profit margins of 6.7 cents on the dollar, and median profits of just 7.4 cents on the dollar. Meanwwile Google, whose packets flood the backbone with their highly profitable "product" is earning 23.8 cents on the dollar and Yahoo rakes in 36 cents on the dollar.

So yes, it is from those commerical content providers that the telecoms should be looking to charge more for the vastness of the backbone that makes the products of those commercial content providers possible.

If Google does not like it, they can build their own backbone.

Again, it is their backbone, bought and paid for out of their meager corporate profits (6.7% for 2005).

If they are losing money on a service I hope to hell they charge more for that service so that they can earn the revenues to improve it, otherwise THEY WILL drop an unprofitable service, as well they should.

I have no moral right to demand they provide any service to anyone at a loss or at less than what the market for that service will bear. If you think they can create unbreakable cost fixing monopolies on anything then you understand neither markets nor technology. Any such attempt by them will only gender additional technological innovations that will, at some time, bypass any such monopolies. That's how markets work.

Again, congress should not be trying to "regulate" anything about any of this. Get out of the way and let the competition compete.

I have no moral right to demand they provide any service to anyone at a loss or at less than what the market for that service will bear. If you think they can create unbreakable cost fixing monopolies on anything then you understand neither markets nor technology. Any such attempt by them will only gender additional technological innovations that will, at some time, bypass any such monopolies. That's how markets work.

The telcos, and for that matter the cable co's, job is to transmit bits over a wire or fiber. I have paid for their service already in my DSL subscription fee, which I might add is already capacity limited by my ISP-Verizon to around 728 kb download and 128 kb upload.

It is not their job (Verizon, etc.) to look at the bits and see if they can charge more for some of them. I have already paid for this telco DSL service and it is not their job to look for Amazon's, Google's, or any other bits and slow them down if Amazon et al doesn't pay their vigorish. BTW, vigorish is the exact correct choice of their proposed procedure.

I have no moral right to demand they provide any service to anyone at a loss or at less than what the market for that service will bear. Au contraire: I have every right to expect them to deliver any bits I choose without discrimination or vigorish, thank you very much!

If Verizon tries this, I will switch to someones VOIP just to screw them out of a line charge! I suppose your next argument will be that poor Verizon has the right to screw up another provider's VOIP?

You can call it vigorish or whatever you want.

The amount, volume, mass of the packets for Google in the pipeline, which Google makes $billions on, at any given moment bears no correlation to anything Google is paying simply to push its content to you and get your request sent to Google in that pipeline.

Google is a commercial enterprise, and you are not. It is Google who may be charged more, for the pipeline's ability to push its mass of packets at a higher rate, against a volume of traffic that in fact those packets, for Google alone, comprise a measurable amount thereof, whereas yours do not. It is doubtful there is any measurable basis to charge you more for your "vigorish" and it is only scare tactics from Google and the like that are presenting that possibility.

Google has no right to make money far in excess of its contribution to the building and upkeep of the pipeline that makes its profitable business possible. It, and others have been having a free ride long enough. They simply want to continue to skate while the telecoms ring from you the vast majority of the cost of the pipeline; which has been subsidized by your land-line fees, of which are in profit decline and thus the natural state of telecom markets looking to pay for the backbone. And who best to provide that revenue, but those who are profiting most by the use of that backbone - the Googles and the Yahoos.

Yahoo.

Google has no right to make money far in excess of its contribution to the building and upkeep of the pipeline that makes its profitable business possible. It, and others have been having a free ride long enough. They simply want to continue to skate while the telecoms ring from you the vast majority of the cost of the pipeline; which has been subsidized by your land-line fees, of which are in profit decline and thus the natural state of telecom markets looking to pay for the backbone. And who best to provide that revenue, but those who are profiting most by the use of that backbone - the Googles and the Yahoos.

Firstly: My bits and all the other bits used by DSL and Cable subscribers equal the bits pushed into the pipe by Google, etc. They have already been paid for by me and other subscribers once already.

Secondly: Just because Google makes more profit than the telcos, means the telcos should get some of it? What a novel socialistic idea! I suppose if a Verizon subsidiary invented Google, they would share all of those extra profits with the DSL subscribers? If the telcos now don't like their fiber business plan, that not my fault nor is it Googles.

Thirdly: Who do you think is really going to pay for this: Google or their customers and clients. In the end it all comes out of my and other consumers pockets; not Googles.

Fourthly: Verizon is apparently too dumb to realize that their landline revenues are at risk to VOIP from cable companies. Sure the cable co's may pull the same thing, but I and any other net savvy customers will make it their business just to screw Verizon out of land line revenue. Do you really think that the cable co's will stand with Verizon if they can pick up the land line and DSL customers??

"Firstly: My bits and all the other bits used by DSL and Cable subscribers equal the bits pushed into the pipe by Google, etc."

Wrong. Your individual "bits", nor anyone elses individual "bits" will never equal the volume of "bits" added by a Google or a Yahoo. In sum, yes, individually no, and that is the distinction. Google is not an individual, and certainly not a "non-profit" organization either; yet in spite of their vast size and their vast footprint, wieght, volume of "bits", they are being asked to be treated as if they are just like lone little ole non-profit you. They are not and they should not be treated as such.

"They have already been paid for by me and other subscribers once already." Wrong again and that is the problem. The "Internet" use of the telecommunications backbone is not paying for the telecommunications backbone. Most of the cost of the backbone is being born by the land-line fees, your home phone bill; which as a portion of profit to revenue is in decline because competition against the land-line services has tweaked the profits down to the bone. That cost squeeze is part of what has driven the telecom mergers. When profits are in decline with little expectation of relief, you seek a larger revenue base from which to withstand the market ups and downs on low profit margins.

"Secondly: Just because Google makes more profit than the telcos, means the telcos should get some of it? What a novel socialistic idea!" There is nothing "socialist" for a commercial venture - the telecoms - to look at revenue enhancement possibilities from their largest commercial customers, as opposed to you, when you, with your land-line fees are already subsidizing the telecommunications back bone that those commercial companies are profiting from the use of.

"I suppose if a Verizon subsidiary invented Google, they would share all of those extra profits with the DSL subscribers?" Oh, you think, in your "socialist mind" that you should be able to dictate what they would do with those profits?

"If the telcos now don't like their fiber business plan, that not my fault nor is it Googles." And if they don't like their current business plan, they have every right to change it, don't they? And, if part of that change is to charge more to those commercial companies whose "business plan" is skating on your subsidies for the back bone, they have every right to do so, don't they?

"Thirdly: Who do you think is really going to pay for this: Google or their customers and clients." Google will raise their advertizing fees, and still not charge you to access their site. If somehow you are worried about those advertizers passing that cost on to the producers of the products they advertize then, yea, sure "it all comes out of my and other consumers pockets". So, whose "pockets" is it supposed to come out of - nobodies?

"Fourthly: Verizon is apparently too dumb to realize that their landline revenues are at risk to VOIP from cable companies." God what ignorance. Of course they realize that, just as they realize their landline revenues are being eaten by Wireless and now even the Cable companies themselves. Which is why the profitability of the landline side of the business is down, which is why the telecoms are concerned about support for the backbone, Internet and all because those landline revenues have subsidized the backbone (which could not have even existed for the Internet without those landline revenues).

"Sure the cable co's may pull the same thing, but I and any other net savvy customers will make it their business just to screw Verizon out of land line revenue." Which many customers are already doing and thus lowering the revenue stream that has been subsidizing the backbone needed for everything, including the Internet.

"Do you really think that the cable co's will stand with Verizon if they can pick up the land line and DSL customers??" They are not standing with them now. They are trying to use their own cable monopolies as land-line telephone back bones. Which is market competition, which is good, and which, as I said above is part of the mix that is diminishing that part of the telecoms revenue base that has been subsidizing the backbone for everthing.

Which, is, as I've said, the commercial and market basis for what the telecoms are trying to do. Distribute more of the cost of that backbone to to those who are profiting from it, instead of relying on your diminishing subsidies.

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